exhibit10_50.htm


     

    
                                               

    Exhibit
10.50

                *** Text Omitted and
Filed Separately with
the Securities and Exchange Commission.

                Confidential
Treatment Requested Under 17C.F.R.
Sections 200.80(b)(4) and 240.24b-2

    


    AMENDMENT
NO. 2 TO

    FUMED
SILICA SUPPLY AGREEMENT

    


    


    This Amendment No. 2 to Fumed Silica
Supply Agreement (this “Amendment” or “Amendment No. 2”) is executed by the
parties and effective as of April 22, 2008  (the “Effective Date”) by
and between Cabot Corporation, a Delaware corporation (“Cabot”), and Cabot
Microelectronics Corporation, a Delaware corporation (“CMC”), and supplements
and amends the FUMED SILICA SUPPLY AGREEMENT executed on January 16, 2004 (the
“Original Agreement”), as amended by Amendment No. 1 dated September 29, 2006
(as amended, the “Agreement”), between Cabot and CMC.  Capitalized
terms used herein without definition and defined in the Agreement shall have the
same meanings as defined in the Agreement.  Cabot and CMC are each
referred to from time to time in the Agreement and herein as a “party” and,
together, the “parties.”

    


    RECITALS

    


    WHEREAS, CMC and Cabot wish to amend
the Agreement to, among other things, extend the duration of the First Term of
the Agreement, revise forecasting methods, volumes and prices for Fumed Silica
and amend certain Exclusivity, Resale and Non-compete provisions applicable to
both parties.

    


    NOW THEREFORE, the parties do hereby
agree as follows:

     

    
      	
              1.  

            	
              Subsection
      (a) of Section 1 of the Agreement is hereby deleted in its entirety and
      replaced to read in its entirety as
follows:

            


    

     

    


     

    “(a)
This Agreement shall commence as of the date hereof, and shall continue until
December 31, 2012 (the “First Term”) unless terminated earlier in accordance
with Section 1(b).  Unless either party shall give a notice of
non-renewal prior to June 30, 2011, this Agreement shall continue after the
First Term until terminated by either party by a written notice of termination,
which shall terminate this Agreement effective on the first June 30 or December
31 more than 18 months after the date such notice is delivered.  The
First Term, together with any continuations, is referred to herein as the
“Term”.  Each year of the Term beginning on the effective date or an
anniversary thereof is referred to herein as a “Term Year”, including the stub
period, if any, between the last anniversary of the effective date and the end
of the Term.”

     

    


    
      	
              2.  

            	
              A
      new Subsection (b) shall be added to Section 1 of the Agreement, and shall
      read in its entirety as follows:

            


    

     

    “(b)
If by September 30, 2008, Cabot has not delivered to CMC a written confirmation
that its [***], then (I) CMC may, not sooner than November 1, 2008, and by not
later than December 31, 2008, notify Cabot in writing that all of the amendments
contained in Amendment No. 2 are terminated and nullified with effect from the
date of such notice, and (II) upon the effective date of such termination the
provisions of the Agreement changed under Amendment No. 2 shall come back into
effect, with the exception of the termination date noted in Subsection 1(a) of
this Agreement, which shall then be March 31, 2010.  Cabot and CMC
confirm that in such event, there shall be no refund by CMC of the price
reduction benefits between January 1, 2008 and September 30, 2008.”

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    
      	
              3.

            	
              As
      of the Effective Date, Section 2.2 of the Agreement is hereby deleted in
      its entirety and replaced to read in its entirety as
    follows:

            


    

     

    “2.2                 Forecasts

     

    
      	
              (a)  

            	
              On
      or before the last day of each calendar month during the Term, CMC shall
      provide Cabot with a forecast (each, a “Forecast”) of the quantities of
      Fumed Silica that CMC expects to purchase from Cabot during the six-month
      period (each rolling six-month period, a “Six-Month Forecast Period”)
      commencing the following calendar month (the “Forecasted
      Quantities”).  The Forecasts shall identify by grade the
      Forecasted Quantities and the Cabot facility or facilities that will
      produce and deliver to CMC such Forecasted Quantities (including the
      volume to be made at each plant).  In addition, the Forecasts
      shall be divided by calendar month within each Six-Month Forecast
      Period.  The calendar months within each Six-Month Forecast
      Period shall be defined as follows:

            


    

     

    First
calendar month after the Forecast delivery date is “Month One” of the Six-Month
Forecast Period

     

    Second
calendar month after the Forecast delivery date is “Month Two” of the Six-Month
Forecast Period

     

    Third
calendar month after the Forecast delivery date is “Month Three” of the
Six-Month Forecast Period

     

    Fourth
calendar month after the Forecast delivery date is “Month Four” of the Six-Month
Forecast Period

     

    Fifth
calendar month after the Forecast delivery date is “Month Five” of the Six-Month
Forecast Period

     

    Sixth
calendar month after the Forecast delivery date is “Month Six” of the Six-Month
Forecast Period

     

    For
illustration purposes, for a Forecast delivered on January 31, February is Month
One, March is Month Two, April is Month Three, May is Month Four, June is Month
Five and July is Month Six, and for the next Forecast delivered on February 29,
March is Month One, April is Month Two, May is Month Three, June is Month Four,
July is Month Five and August is Month Six.

     

    
      	
              (b)  

            	
              Certain
      monthly volume figures in a newly delivered Forecast may be changed from
      previously delivered Forecasts, as follows:  Month Five and
      Month Four in the newly delivered Forecast may not be [*** ] of the
      monthly forecasted volume in the Forecasts in which such calendar months
      first appeared as Month Six.  Note that although volumes for
      some months may be adjusted twice, the [***] permissible volume variation
      applies only to the originally forecasted
      volume for the then-current Month Five and Month
  Four.

            


    

     

    
      	
              (c)  

            	
              Once
      the adjustments permitted in subsection (b) above are made, if any, then
      Forecasts shall be binding on CMC and the liquidated damages provision of
      Section 2.4 shall apply.  Cabot shall accept Forecasts submitted
      in compliance with this Section 2.2 and Section 2.3
  below.

            


    

     

    
      	
              (d)  

            	
              With
      respect to planned shutdowns of Cabot’s manufacturing facilities, the
      parties shall work together and cooperate with each other regarding
      necessary adjustments to Forecasts and delivery schedules
      hereunder.”

            


    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              4.

            	
              As
      of the Effective Date, Section 2.3(b) of the Agreement shall be deleted in
      its entirety and replaced to read in its entirety as follows below, and a
      new Subsection (d) shall be added to Section 2.3 of the Agreement and
      shall read in its entirety as follows
below:

            


    

     

    
      	
               
      

            	
              “(b)
      Subject in all cases to the maximum volume limitations for the Tuscola
      Plant and the Barry Plant set forth in 2.3(a) above, in the event that CMC
      orders volumes of Fumed Silica from Cabot in excess of Forecasted
      Quantities for any Six-Month Forecast Period (after giving effect to
      adjustments permitted under Section 2.2(b)), Cabot shall not be obligated
      to supply to CMC Fumed Silica [***] of the aggregate volumes for any
      Six-Month Forecast Period (after giving effect to adjustments permitted
      under Section 2.2(b) contained in
  any  Forecast.”

            


    

     

    
      	
               
      

            	
              “(d)
      Cabot’s Maximum Volumes supply obligations set forth in Sections 2.3(b)
      and 2.3(c) above shall not apply if CMC fails to purchase [***] of Fumed
      Silica, in the aggregate, during any two consecutive six-month periods
      (commencing on January 1 and July 1, respectively); provided, however,
      that Cabot shall remain obligated to supply Fumed Silica pursuant
      to  Forecasts submitted in compliance with Section 2.2 and this
      Section 2.3, but for the remaining duration of this Agreement, Month Six
      in newly delivered Forecasts may not be [***] of the average purchased
      monthly volume for the immediately prior six-month
  period.”

            


    

    


    
      	
              5.  

            	
              As
      of the Effective Date, Section 2.4 of the Original Agreement shall be
      deleted in its entirety and replaced to read in its entirety as
      follows:

            


    

    


    “2.4           Minimum
Volumes

    


    
      	
              (a)  

            	
              Provided
      that CMC has purchased at least [***] of Fumed Silica in the aggregate
      during two consecutive six month periods (commencing on January 1 and July
      1, respectively, and calculated as of June 30 and December 31 of each Term
      Year for the six-month periods ending on such dates) (each such six-month
      period, a “Six-Month Compliance Period”), then CMC shall be obligated to
      purchase from Cabot during each applicable Six-Month Compliance Period, a
      “Minimum Volume,” meaning at least 90% of the Forecasted Quantities during
      the Six-Month Forecast Period consisting of such Six-Month Compliance
      Period (after adjustment, if any, as permitted by Section 2.2 and
      2.3).  Cabot and CMC recognize that damages for CMC’s failure to
      purchase Minimum Volumes would be difficult to ascertain and
      prove.  Cabot and CMC agree that if, during any Six-Month
      Compliance Period, CMC fails to purchase from Cabot the Minimum Volume of
      Fumed Silica for such Six-Month Compliance Period, CMC shall pay to Cabot
      liquidated damages in an amount equal to the product obtained by
      multiplying:

            


    

    


    
      	
              (i)  

            	
              the
      difference (in pounds) between (x) 90% of the aggregate forecasted volume
      for the applicable Six-Month Forecast Period, and (y) the aggregate amount
      of Fumed Silica (in pounds) actually purchased by CMC during such
      Six-Month Compliance Period, times

            


    

    
      	
              (ii)  

            	
              $1.35/lb.

            


    

    


    
      	
              (b)  

            	
              Where
      CMC has purchased less than [***] pounds of Fumed Silica in the aggregate
      during two consecutive six month periods (commencing on January 1 and July
      1, respectively, and calculated as of June 30 and December 31 of each Term
      Year for the six-month period ending on such dates) (each such six-month
      period, a “Six-Month Noncompliance Period”), then CMC shall be obligated
      to purchase from Cabot during each applicable Six-Month Noncompliance
      Period, a “Minimum Volume,” meaning at least 90% of the aggregate volumes
      of Fumed Silica forecasted to be purchased by CMC during Month Three,
      Month Two and Month One of each Six-Month Forecast Period consisting of
      such Six-Month Compliance Period (after adjustment, if any, as permitted
      by Section 2.2 and 2.3).  Cabot and CMC recognize that damages
      for CMC’s failure to purchase Minimum Volumes would be difficult to
      ascertain and prove.  Cabot and CMC agree that if, during any
      Six-Month Noncompliance Period, CMC fails to purchase from Cabot the
      Minimum Volume of Fumed Silica for such Six-Month Noncompliance Period, if
      required by this Section 2.4(b), CMC shall pay to Cabot liquidated damages
      in an amount equal to the product obtained by
  multiplying:

            


    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    
      	
              (i)  

            	
              the
      difference (in pounds) between (x) 90% of the aggregate forecasted volume
      for Month Three, Month Two and Month One of the applicable Six-Month
      Forecast Period, and (y) the aggregate amount of Fumed Silica (in pounds)
      actually purchased by CMC during Month Three, Month Two and Month One of
      the applicable Six-Month Forecast Period,
times

            


    

    
      	
              (ii)  

            	
              $1.35/lb.

            


    

    


    
      	
              (c)  

            	
              Cabot
      and CMC agree that the liquidated damages set forth in Sections 2.4(a) and
      (b) above are Cabot’s sole and exclusive remedy for CMC’s failure to
      purchase the applicable Minimum Volumes required by such
      Sections.  Cabot and CMC further agree that such liquidated
      damages represent a reasonable estimate of Cabot’s damages and do not
      constitute a penalty.

            


    

    


    Liquidated
damages payable by CMC under Section 2.4, if any, will be computed as of June 30
and December 31 in each Term Year for the six-month period ended on such
dates.

     

    
      	
               
      

            	
              (d)

            	
              Within
      thirty (30) days of the end of each Term Year in which a Minimum Volume
      applied and was not met pursuant to Section 2.4(a) or 2.4(b) above, Cabot
      shall invoice CMC for any compensation payable by CMC under Section 2.4(a)
      or 2.4(b), if any, for such period, and CMC shall pay such invoiced
      amounts to Cabot within thirty (30) days following its receipt of Cabot’s
      invoice.

            


    

    


    
      	
               
      

            	
              (e)

            	
              From
      and after the Effective Date, the May 1, 2007 Letter of Acknowledgment
      between the parties shall no longer be
  effective.”

            


    

    


    
      	
              6.  

            	
              As
      of the Effective Date, Subsection 3.1(a) of the Agreement shall be deleted
      in its entirety and replaced to read in its entirety as
      follows:

            


    

    


    “(a)
CMC shall purchase from Cabot all of the Fumed Silica necessary to produce the
products produced by CMC on the Effective Date, but only up to the total of the
Maximum Volumes. [***]  This obligation shall continue even if CMC’s
purchase of Fumed Silica falls [***] in any two consecutive six month periods
commencing on January 1 and July 1, respectively.  With respect to
products developed and produced by CMC after the Effective Date, CMC shall not
be obligated to purchase from Cabot any of the fumed silica necessary to produce
such products.

    


    Cabot
acknowledges that the confidentiality provisions of Section 12.11 of the
Agreement and Section 14 of Amendment No. 2 apply to [***] and that such
schedule constitutes Confidential Information of CMC disclosed by CMC to Cabot
hereunder.”

    


    
      	
              7.  

            	
              As
      of the Effective Date, Subsection  3.1(c) of the Agreement shall
      be deleted in its entirety and replaced to read in its entirety as
      follows:

            


    

    


    “(c)
Notwithstanding Section 3.1(a) above, in the event CMC requests a change to a
Specification for the Fumed Silica, which change is necessary in order to
achieve a material performance difference in CMC’s end product(s) and Cabot is
not able or is unwilling to modify such Specification, CMC shall have the right
to obtain such modified product from any third party, subject to any
intellectual property rights solely owned by Cabot.”

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    
      	
              8.  

            	
              As
      of the Effective Date, Subsection  3.1(d) of the Agreement shall
      be deleted in its entirety and replaced to read in its entirety as
      follows:

            


    

    


    “(d)
Notwithstanding Section 3.1(a) above, in the event that Cabot fails to supply
CMC with its requirements for Fumed Silica for any reason, CMC shall have the
right to obtain such Fumed Silica from any third party, subject to any
intellectual property rights solely owned by Cabot.”

    


    
      	
              9.  

            	
              A
      new Subsection 3.1(e) shall be added to the Agreement, reading in its
      entirety as follows:

            


    

    


    “(e)  Notwithstanding
the provisions of Subsection 3.1(b) above,[***], subject to any intellectual
property rights solely owned by CMC. [***]  The clarification in the
two preceding sentences does not otherwise modify or amend Subsection
3.1(b).  Furthermore, Cabot and CMC each specifically acknowledge and
agree that with respect to Subsection 3.1(b) and this Subsection 3.1(e), each of
them shall remain subject to all of the terms and conditions, and rights,
obligations and restrictions, of all written agreements executed by and between
Cabot and CMC for the duration of their respective terms, including, but not
limited to, that certain Confidential Disclosure & License Agreement (the
“CDL Agreement”) and that certain Master Separation Agreement between the
parties, each dated as of March 28, 2000 (all such written agreements
collectively referred to as the “Existing Obligations”).  None of the
Existing Obligations is waived or modified, or shall be deemed to be waived or
modified, as a result of or otherwise in connection with this Section 3.1(e),
including, but not limited to, those provisions regarding the parties’ joint
interest in certain dispersion intellectual property and patents, and the
granting of certain limited licenses, under the CDL Agreement. In addition,
nothing in this Section 3.1(e) operates to grant to Cabot any rights under or
any license to intellectual property owned solely by CMC, including, but not
limited to, CMC’s patent rights.”

    


    
      	
              10.  

            	
              As
      of the Effective Date, Section 3.2 of the Agreement shall be deleted in
      its entirety and a new Section 3.2 shall be added to the Agreement,
      reading in its entirety as follows:

            


    

    


    “3.2  Resale
Prohibition.  The parties intend and agree that the Fumed
Silica being sold hereunder to CMC is being sold solely for the use by CMC and
its subsidiaries in manufacturing their products.  Accordingly, CMC
and its subsidiaries are prohibited from reselling any Fumed Silica purchased
hereunder.  However, in the event CMC determines, in good faith, that
the Fumed Silica supplied hereunder, which otherwise meet the Specifications, is
not fit for CMC’s use in the manufacture of CMP slurries, CMC shall have the
right to resell such Fumed Silica, provided, CMC first offers Cabot the option
to purchase such Fumed Silica back from CMC at a price which is the lower of (i)
the price paid by CMC to Cabot for such material, or (ii) the price at which CMC
will resell such material.”

    


    
      	
              11.  

            	
              As
      of the Effective Date, Section 5.1 of the Agreement, relating to pricing,
      shall be deleted in its entirety and a new Section 5.1 shall be added to
      the Agreement, reading in its entirety as
  follows:

            


    

    


    “5.1  Prices.  Cabot
shall sell the Fumed Silica to CMC in accordance with the following prices (the
"Prices"):

    


    (a)
Fumed Silica Price.  With effect from January 1, 2008, except as may
be provided for under Section 3.1(b) above in the case of a Most Favored Nations
price or under Section 5.1(b) below in the case of an Inflation Adjustment, the
price for Fumed Silica, whether Maximum Volumes or Excess Volumes shall be equal
to the base price as defined in Table 1 below (the “Base Price”) for each of the
indicated Term Years. The price of the Fumed Silica to be purchased shall be
determined by the date the order therefor is placed with Cabot, with respect to
all volumes specified therein to be delivered within 90 days after the date such
order is placed, and by the date specified for delivery, with respect to all
volumes specified for delivery thereafter.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    Table 1

    


    [***]

    


    


    Price
if volume purchased is less than [***] = Price Level A

    


    Price
if volume purchased is between [***]= A – [(A-B)*
[    ]

    


    Where
V is the volume in MT/yr

    


    Price
if volume purchased is between[***] ($/kg) = Price Level B

    


    Price
if volume purchased is between [***] = B – [(B-C)* (V- [***]

    


    Where
V is the volume in MT/yr

    


    Price
if volume purchased is greater than [***] ($/kg) = Price Level C

    


    Table
2  [***]

    


    [***]

    


    


    The
above Table 2 is provided for illustrative purposes only.

    


    Inflation
adjustment.   Beginning on January 1, 2010, there shall be an
annual inflation adjustment to the prices for Fumed Silica, to be calculated at
the commencement of each calendar year, to be effective during such calendar
year, based on the percentage increase in the Producer Price Index (PPI) for
Total Manufacturing Industries as reported by the Bureau of Labor and
Statistics, to be calculated as follows:

    


    For
the year 2010, the inflation adjustment will be triggered if the annual
percentage increase (the “Inflation Factor”) in the PPI for the previous year,
relative to the prior year, is greater than[***]  The inflation
adjustment of the Base Price1 will then be calculated by the
following formula:

    


    Adjusted
Price for 2010 ($/kg)

     =
Base Price for
2010 *[***]

    where
Inflation Factor (%) = [***] *[***]

    


    If
the Inflation Factor is less than[***] for the year 2010, no adjustments will be
made for the year 2010.  The inflation adjustment for 2010 will be
applied, starting January 1, 2010

    


    For
the year 2011, the inflation adjustment will be triggered if the annual
percentage increase (the “Inflation Factor”) in the PPI for the previous year,
relative to the prior year, is greater than[***].  The inflation
adjustment of the Base Price will then be calculated by the following
formula:

    


    
      	
               
      

            	
              Adjusted
      Price for 2011 ($/kg)

            


    

    
      	
               
      

            	
               =
      Adjusted Price
      for 2010 *[***]* (Inflation Factor
–[***]

            


    

    


    
      	
               
      

            	
              where
      Inflation Factor (%) = [***]*[***]

            


    

    


    If
the Inflation Factor is less than[***] for the year 2011, no adjustments will be
made for the year 2011.  The inflation adjustment for 2011 will be
applied, starting January 1, 2011

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    For
the year 2012, the inflation adjustment will be triggered if the annual
percentage increase (the “Inflation Factor”) in the PPI for the previous year,
relative to the prior year, is greater than[***].  The inflation
adjustment of the Base Price will then be calculated by the following
formula:

    


    Adjusted
Price for 2012 ($/kg)

     =
Adjusted Price for
2011 *[***]* (Inflation Factor –[***]

    


    where
Inflation Factor (%) = [***]*100

    


    [***]

    


    If
the Inflation Factor is less than [***] for the year 2012, no adjustments will
be made for the year 2012.  The inflation adjustment for 2012 will be
applied, starting January 1, 2012

    


    


    The following graph indicates the
pricing information, excluding any inflation adjustment as specified
above:

    


    The
above Table 3 is provided for illustrative purposes only.

    


    The
pricing for the first six months (January-June) (“first half”) of every year
will be initially fixed based on the annualization of the volumes ordered during
the 6-month period in the preceding calendar year. If the actual volume of
product purchased during the first half causes a different pricing to be
applicable for that 6-month period, a credit or an invoice (as required) will be
issued by Cabot no later than Aug 1. The same square-up procedure will be
conducted for the second six- months of every year (“second half”), using the
forecast volumes for the first half of that year. A credit or invoice for the
second half of the year will be issued by Cabot, no later than February 1 of the
following year.”

    


    
      	
              12.

            	
              As
      of the Effective Date, Section 8.3 of the Agreement shall be deleted in
      its entirety and a new Section 8.3 shall be added to the Agreement,
      reading in its entirety as follows:

            


    

    


    
      	
              8.3  

            	
              “Continuous Improvement
      Plan. [***] Cabot will devote the appropriate level of resources
      and make good faith efforts
required[***].

            


    

    


    
      	
              13.  

            	
                         As
      of the Effective Date, the following sentence shall be appended to the end
      of

            


    

    Subsection
8.7(b) of the Agreement:

    


    [***]

    


    
      	
              14.  

            	
              This
      Amendment constitutes the complete agreement between the parties regarding
      the subject matter being amended hereby and supersedes all prior or
      contemporaneous agreements or representations, written or oral, concerning
      the subject matter of this
Amendment.

            


    

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
 

    
      	
              15.  

            	
              Except
      as amended hereby, the Agreement is ratified and confirmed in all
      respects.  This Amendment shall take effect as of the Effective
      Date and as of the Effective Date, all references to the Agreement shall
      refer to the Agreement as amended by this Amendment No.
  2.

            


    

    


    
      	
              16.  

            	
              The
      parties acknowledge that this Amendment No. 2 contains Cabot and CMC
      Confidential Information subject to the provisions of Section 12.11 of the
      Agreement. In addition to the exclusions set forth in Section 12.11 (a)
      through (f) of the Agreement, each party may disclose Confidential
      Information of the other contained herein as required by law or regulation
      or pursuant to the rule of law or contractual undertakings with a stock
      exchange (collectively, the “Requirements”), provided however, that each
      party disclosing the Confidential Information of the other pursuant to any
      Requirement will use reasonable efforts to provide notification to the
      other party prior to any such public disclosure of the other party’s
      Confidential Information pursuant to the
  Requirements.

            


    

    


    


    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
executed and delivered by their respective duly authorized representatives as of
the date first set forth above.

    


    
      	
              CABOT
      CORPORATION

               

               

               

              By_/s/________________________

              Duly Authorized
      Signatory

               

              Name:

              Title:

            	
              CABOT
      MICROELECTRONICS CORPORATION

               

               

              By_/s/________________________

              Duly Authorized
      Signatory

               

              Name:

              Title:

               

            


    

    


    


    


    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

     Schedule
3.1(b)

    


    


    [***]

    


    


    [***]

    


    =

    


    


    


    


    


    


    


    


    


     

    


    

      

    

     

      1 Base
Price is calculated as per Section 5.1(a)

    

    
 

    9